Prendergast and John Holland Pty Ltd
[2012] AATA 504
•2 August 2012
[2012] AATA 504
Division GENERAL ADMINISTRATIVE DIVISION File Number
2012/1882
Re
ELIZABETH PRENDERGAST
APPLICANT
And
JOHN HOLLAND PTY LTD
RESPONDENT
ORDER
Tribunal Deputy President S D Hotop
Date 2 August 2012 Place Perth The applicant’s request, lodged with the Tribunal on 9 May 2012, for the making of an order under s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) is refused.
................[sgd]........................................................
S D Hotop, Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – stay – request by applicant for order staying reviewable decision ceasing compensation incapacity payments – relevant factors – applicant has arguable case – respondent likely to be able to recover moneys paid to applicant as result of stay order – applicant not suffering financial hardship – stay order not appropriate for purpose of securing effectiveness of hearing and determination of application for review – Tribunal not of opinion that desirable to make stay order – applicant's request for stay order refused
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth), s 41
REASONS FOR ORDER
Deputy President S D Hotop
2 August 2012
Introduction
Elizabeth Prendergast (“the applicant”) has applied to the Tribunal for review of a “reviewable decision” made on behalf of John Holland Pty Ltd (“the respondent”) on 3 May 2012 under s 62 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (“SRC Act”).
The reviewable decision of 3 May 2012 affirmed a determination, dated 2 April 2012, that, as at 2 April 2012, the applicant had ceased to suffer from the effects of a compensable injury, namely “aggravation of right L5/S1 facet joint degeneration” sustained on 17 December 2010 (“the compensable injury”), and, accordingly, was not entitled to compensation for medical expenses and incapacity for work under, respectively, s 16 and s 19 of the SRC Act from 2 April 2012.
On 9 May 2012 the applicant requested the Tribunal to make an order, pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”), that the reviewable decision of 3 May 2012 be “stayed pending determination of appeal”. The grounds for that request were stated as follows:
“1. The medical evidence of the applicant’s treating doctors confirm applicant is still suffering effects of accident on. (sic)
2.Applicant is unable to work and will not be in a position to earn any income pending hearing of appeal.”
The Relevant Legislation
Section 41 of the AAT Act relevant provides:
“ 41 Operation and implementation of a decision that is subject to review
(1)Subject to this section, the making of an application to the Tribunal for a review of a decision does not affect the operation of the decision or prevent the taking of action to implement the decision.
(2)The Tribunal may, on request being made, as prescribed, by a party to a proceeding before the Tribunal (in this section referred to as the relevant proceeding), if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review.
…
(4)Subject to subsection (5), the Tribunal shall not:
(a)make an order under subsection (2) unless the person who made the decision to which the relevant proceeding relates has been given a reasonable opportunity to make a submission to the Tribunal, as the case may be, in relation to the matter; or
…”
The Applicant’s Evidence
The applicant tendered in evidence a statement, dated 4 July 2012, and she confirmed that its contents are true and correct. That statement is as follows:
“ 1. I am 52 years of age …
2.I am currently unemployed as John Holland Pty Ltd have terminated my services.
3.Prior to my termination I was employed by John Holland Pty Ltd as a Class CE 1 Cleaner (‘Peggy’).
4. My duties include:
…
5.I live with my husband who self-employed (sic), by buying, renovating and then selling houses. He does not earn an income as such; any profit he makes after taxes is used to renovate the next house. The purpose of which is to be mortgage fee (sic) in the long term.
Hardship
6.I am the sole income earner in the household.
7.Things have been extremely stressful since John Holland ceased my payments on the 30th of March 2012.
8.We have not finished doing up the house as my income has ceased and we have had to use the house funds to survive. Because my income has ceased the bank will not extend our loan.
9.I have attached our current list of Assets and Liabilities along with our Income and Expenses with supporting documentation.
Likelihood of Recovery
10.In the event I was unsuccessful at a review of my employer’s decision we have enough equity in our properties to be able to refund any monies paid as part of the review.
11.We currently have the properties in Collie on the market to be sold. As is our retirement home in Tasmania.
Workers Compensation
[The statement then refers at length to the compensable injury and its alleged effects, and to a related claim by the applicant for compensation for “depression” which is the subject of a separate application for review (No 2012/1806) and concludes:]
41.I am dumbfounded as to how John Holland Pty Ltd continues to deny my claim on the basis of events that occurred, at least 6 months, prior to my seeing my Doctor for Depression.
42.As evidenced by my Doctors’ reports I have not recovered from the effects of the accident and nor am I able to return to my pre accident duties as a Peggy which are quite demanding.
43.I am not able to carry out my pre accident duties because of my inability to cope with my ongoing symptoms in my back.
44.I was on various medications including panadeine forte, morphine patches to help with my pain, gabapentin for nerve pain, amitriptyline and diazepam to help with sleep.
45.However since the employer has ceased my payments I am not able to afford to pay for various medical costs including my medication.
46.I believe that I have a very good case if this matter was to proceed to review and ask that payments of my compensation and treatment to be reinstated.” (Exhibit A1)
The statement of assets and liabilities, income and expenditure, referred to in para 9 of the applicant’s abovementioned statement, is as follows:
STATEMENT OF ASSETS & LIABILITIES
FOR ELIZABETH PRENDERGAST
AS AT 22 JUNE 2012
Movable PropertyOutside WAIn WA
Cash in Bank 400.00
Car 5,000.00
Motorbike (Trike) joint ownership 10,000.00
Furniture (jointly owned) 10,000.00
Tools (jointly owned) 20,000.00
Total45,000.00
Immovable Property
Residential Home Collie 600,000.00
Investment property 300,000.00
Investment property (Tasmania) 1,000,000.00
Total1,900,000.00
DebtsOutside WAIn WA
Mortgage Loan … 680,000.00
Overdraft Commonwealth bank
ending … (sic) 296,257.00
Total680,000.00 296,257.00
INCOME AND EXPENDITURE
FOR ELIZABETH PRENDERGAST
AS AT 22 JUNE 2012
INCOME $ EXPENDITURE $
Self Nil Mortgage Payments 4,300.00
Husband Nil Viridian Line of Credit 500.00
Total: Nil Food 400.00
Electricity/Gas 100.00
Telephone 203.00
Rates and Taxes 180.00
Health Insurance 302.00
General Insurance 280.00
Vehicle expenses 250.00
TOTAL INCOME Nil TOTAL EXPENDITURE 6,515.00.
(Exhibit A2)
The “supporting documentation” also referred to in para 9 of the applicant’s statement, comprising bank statements and notices of due and payable council rates, water service accounts, electricity accounts, telephone account, and motor vehicle licence fee and third party insurance policy, was tendered in evidence (Exhibit A3).
In her examination-in-chief the applicant gave evidence to the following effect:
·all the property referred to in her statement of assets (part of Exhibit A2, set out in paragraph 6 above) is jointly owned by her and her husband;
·the motorbike referred to in the abovementioned statement of assets and liabilities is actually worth $20,000 but it was put on the market at $10,000 and the selling price has since been reduced to $8,000;
·she and her husband put the motorbike on the market in order to sell it and “get some money”;
·they have since sold most of their furniture “just to survive” – a bed, a dining suite and a lounge suite are all that remain;
·the residential property in Collie is on the market at $720,000, which is its “present value;
·the investment property in Collie was initially on the market at $299,000 but the asking price has since been reduced by $35,000 “for a quick sale”;
·the investment property in Tasmania was purchased for $650,000 (in September 2011) and it is now on the market at $750,000;
·they have put those three properties on the market in order “to survive” and “to come out with something at the end of the day”;
·the mortgage loan of $680,000 is secured against the investment property in Tasmania and the overdraft of $296,257 is secured against the investment property in Collie;
·they are not presently able to make the payments required to service those loans;
·they have spoken to the Bank about it and have received from the Bank some “request for assistance” forms;
·they were about two months ahead in their payments and are now about six weeks ahead but at the end of that period the Bank will “probably take the properties from [them]”;
·her husband has been working on renovations of their residential property – they had money set aside to pay for those renovations but they have had to use that money “to survive” and now do not have the money to complete those renovations;
·she has been assisted financially by friends to buy food and even to come to the Tribunal for the hearing;
·she has not presently applied for financial assistance from Centrelink because five years ago, when she was out of work, she applied for such assistance but was told that she had too many assets and would have to sell one of their houses;
·the amounts of expenditure stated in the abovementioned statement of income and expenditure refer to monthly expenditure and those amounts are presently accurate.
In cross-examination the applicant gave evidence to the following effect:
·as regards her employment history, she commenced employment with the respondent in November 2009, prior to which she worked as a “peggy” at a power station for about two years and prior to that she did “admin work” for a scaffolding company for three years;
·in 2000–2001 she conducted a business from her home involving massage and “holistic” treatments for women;
·she has also been qualified as a maternity nurse aid and as a domestic travel agent;
·she and her husband have been living in the Collie investment property for the last six months “while the bathroom and kitchen [in the residential property] were being worked on”;
·they have lived in the Collie residential property since 2001;
·they bought the investment property in Tasmania and took out the mortgage on that property in September 2011, at a time when she was already off work;
·the Collie residential property is unencumbered;
·they bought the Collie investment property in 2003–2004 and her husband did renovations on that property;
·the Collie investment property has not been rented out but it “could be” for “at least $250 per week”;
·the investment property in Tasmania has been on the market for about three weeks and they are “hoping it will sell quickly”;
·she saw a psychiatrist, Dr O’Connor, in 2011 and told her that her husband worked full time as a house renovator;
·her husband’s back is “worse than [her’s]” and he “works at his own pace”, and he is presently seeking employment;
·she has not presently sought financial assistance from Centrelink and she does not know “what they would say” if she did;
·she and her husband are members of a superannuation fund and she has been informed that it would take 6–12 months before she could obtain incapacity benefits from the fund;
·her superannuation account is worth about $45,000; she does not know the value of her husband’s superannuation account;
·her bank overdraft account is used to make mortgage repayments and pay for living expenses, and to pay tradesmen for their work;
·in the last three weeks that account has been debited by over $13,000 and in the last seven weeks it has been debited by over $30,000;
·she continued to draw money from that account after her incapacity payments were discontinued by the respondent in order to “get the house finished” but it is “still not finished”;
·she continued to draw money from that account to pay tradesmen after lodging her request for a stay order in this matter because they were “trying to get the house finished”.
In re-examination the applicant said that the Collie residential property is presently not fit to live in because “it does not have a bathroom – it has half a bathroom”, and that, if she and her husband moved out of the Collie investment property so that it could be rented out, they would have to move back to the residential property.
In response to questions from the Tribunal, the applicant said that, prior to her compensable injury in December 2010, she was working 13-day fortnights (including overtime) and was clearing up to $1,900 per week, and that, at the time her weekly incapacity payments were terminated by the respondent at the end of March 2012, those payments amounted to about $1,400 per week.
Relevant Principles
Section 41(1) of the AAT Act provides that the making of an application to the Tribunal for review of a decision does not affect the operation or implementation of that decision. Subsection (2) of s 41, however, confers on the Tribunal a broad discretionary power to make such order staying or otherwise affecting the operation or implementation of the decision under review “as the Tribunal consider appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review”, if the Tribunal “is of the opinion that it is desirable to do so after taking into account the interests of any person who may be affected by the review”.
In considering whether to make an under under s 41(2) of the AAT Act in cases like the present, where the decision under review involves the cessation of payments of money to the person who has applied to the Tribunal for review of that decision and who has requested the Tribunal to make an order staying that decision, the Tribunal has customarily had particular regard to three main factors, namely:
·the degree of hardship (if any) which may be suffered by that person as a result of the refusal to make a stay order;
·in the event that the person’s application for review is unsuccessful, the likelihood of recovery (by the payer) of moneys paid to that person as a result of the making of a stay order; and
·the prospects of success of the person’s application for review.
The parties addressed these factors in their submissions.
Submissions
The applicant
The applicant’s written submissions relevantly state as follows:
“ Hardship
5. The applicant is 52 years of age … and resides in Collie.
6.Due to her age and based on her General Practitioner’s certification the applicant is currently unable to work due to the combination of her physical injuries coupled with her psychiatric condition.
7.As a result the applicant is not in receipt of any wages or Government benefits, and the applicant is totally dependent on her husband’s earning and savings.
8.Prior to her workers’ compensation claim the applicant was a major contributor to paying the mortgage and household expenses.
9,The Financial Statement provided by the applicant clearly shows that the applicant is in financial difficulty and is unable to meet her financial commitments.
10.In addition to usual household expenses the applicant is, in light of the decision by the respondent, now required to pay for her ongoing treatment and medication for both her physical and psychiatric injuries which is an additional financial burden.
11.If the applicant cannot meet her financial commitments she will have to sell her property and/or consider extending the mortgage on her house. Without an income it is unlikely the applicant will be granted approval for a further loan resulting in foreclosure of her home.
12.The applicant is currently living of (sic) her savings after which they will not be able to make the required mortgage payments.
Likelihood of Recovery
13.The assets of the applicant are outlined in her Financial Statement.
14.If a stay is granted the applicant’s financial assets will remain in existence until the final decision on appeal therefore there is little if any risk that, if the respondent was subsequently successful at the review hearing, the applicant would not be able to repay the monies.
Prospects of Success
15.In considering this issue the Tribunal should assess, on the available evidence, whether the applicant has an arguable case.
…”
The written submissions then outline the medical evidence on which the applicant relies in support of her application for review for the purpose of seeking to establish that she has at least an arguable case in support of that application.
In oral submissions the applicant also sought to address the requirement in s 41(2) of the AAT Act that an order made under that subsection be one which “the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review”. The applicant submitted that, if a stay order is not made by the Tribunal, she will, by reason of her financial hardship, be in the position of having to sell one or more properties urgently at less than market value and thereby suffer a financial loss for which a favourable decision by the Tribunal on her application for review could not compensate her. The applicant further submitted that, even in the event that she was subsequently able to buy back such a property at the price for which she sold it, she would nevertheless suffer a financial loss as a result of paying the necessary stamp duty which she would be liable to pay on the purchase of the property – a loss which, likewise, the Tribunal could not make good. Having regard to those considerations, the applicant submitted, a stay order is appropriate in this case in order to secure the effectiveness of the hearing and determination by the Tribunal of her application for review.
The respondent
The respondent’s written submissions relevantly state as follows:
“ Prospects of success
4.1In the respondent’s submission, the reviewable decision is correct and supported by well reasoned specialist medical evidence.
4.2Whilst the applicant raises the issue of prospects of success in the submissions filed, at highest, the applicant’s submissions highlight there is conflicting medical evidence.
4.3In the respondent’s submission, the issue of prospects of success is not so significantly in favour of the applicant to warrant this consideration favouring the granting of a stay.
Prospects of an overpayment
4.4In the respondent’s submission, this factor weighs heavily against the granting of a stay in the present matter. There is a certain prospect of an overpayment should the Tribunal affirm the decision under review.
45.The respondent submits that if the applicant will experience financial difficulty flowing from the cessation of her incapacity payments as she is contending, there is an even stronger inference to be drawn that she will not be in a financial position at the completion of the Tribunal proceedings to repay any overpayment.
4.6The respondent understands from the applicant’s statement dated 4 July 2012 that the applicant will not have the capacity to repay any overpayment unless properties owned by her and her husband are sold. Whilst the applicant has indicated she currently has the properties ‘on the market’, it is uncertain as to whether the properties are able to be sold in the current economic climate, for what price and whether the properties will be kept on the market in the event a stay is ordered.
4.6In the respondent’s submissions, this is not a satisfactory explanation to support a conclusion the applicant will be able to refund any overpayment.
Financial hardship
4.8Despite the issues raised by the applicant with respect to financial hardship, this factor alone is not sufficient to warrant the granting of a stay order.
4.9In any event the respondent contends that the material provided by the applicant does not establish that she actually is in financial hardship as a result of the respondent’s decision.
…
4.11This leads to the final factor for consideration.
Desirable and appropriate
…
4.13In the respondent’s submissions (sic), this final factor is a most important factor when one considers the express requirements of s 41(2) of the AAT Act. This is apparent from a number of prior Tribunal decision looking at the issue of a stay application in the Commonwealth Workers Compensation setting.
…
4.15The respondent submits that in the present matter, the circumstances are not such as to make it appropriate to make a stay order under s 41(2) of the AAT Act.”
In oral submissions the respondent, in seeking to refute the applicant’s claim of financial hardship, referred, in particular, to a statement of her bank overdraft account (part of exhibit A3) which indicates that, in the period 1–31 May 2012, approximately $20,000 was drawn on that account, and to her statement of assets and liabilities (Exhibit A2) which indicates that a further $13,221 (approximately) was drawn from that account in the period 1–22 June 2012. It was also noted by the respondent that a substantial portion of those sums was, according to the applicant’s own evidence (see paragraph 9 above), used to pay for ongoing renovations to her residential property at a time subsequent to the discontinuation of her incapacity payments (on 2 April 2012) and indeed, subsequent to her request, dated 7 May 2012, to the Tribunal for a stay order in this matter.
Consideration
The prospects of success of the applicant’s application for review
As presently advised, I expect that the ultimate determination of the applicant’s application for review will largely depend on the Tribunal’s assessment of the applicant’s oral evidence and the medical evidence presented by each of the parties. Having regard to the applicant’s submissions, I accept that she has an arguable case in this proceeding. It is neither necessary nor desirable, for present purposes, for me to comment further in relation to the prospects of success of the applicant’s application for review. Suffice it to say that, in my assessment, this factor does not weigh against the making of a stay order in this case.
The likelihood of recovery by the respondent of moneys paid to the applicant as a result of the making of a stay order
Having regard to the abovementioned evidence regarding the applicant’s assets and liabilities (Exhibit A2 – see paragraph 6 above) and her oral evidence in that regard (see paragraphs 8–9 above), I accept her submission that, in the event that her application for review is unsuccessful, “there is little, if any, risk” that she would not have the financial capacity to repay to the respondent the total amount of moneys paid to her as a result of the making of a stay order. Accordingly, I accept that it is highly likely that the respondent would be able to recover that amount from her in that event.
This factor, in my assessment, does not weigh against the making of a stay order in this case.
Hardship
According to the statement tendered in evidence by the applicant regarding her assets and liabilities as at 22 June 2012 (part of Exhibit A2), she and her husband have assets totalling $1,945,000 and liabilities totalling $976,257. Included amongst those assets is their residential property valued at $600,000 (but which, according to the applicant’s oral evidence, is presently on the market at $720,000), which is unencumbered, and an investment property in Tasmania valued at $1,000,000 (secured by a mortgage whose debit balance is about $680,000) which, according to the applicant’s oral evidence, is presently on the market at $750,000 (having been purchased in September 2011 for $650,000). I note the applicant’s oral evidence that she also has a superannuation account with a balance of about $45,000.
Accordingly to the statement tendered in evidence by the applicant regarding her income and expenditure as at 22 June 2012 (part of Exhibit A2), she and her husband have no income and their household expenditure totals $6,515 per month.
I note the applicant’s evidence that they have since sold most of their household furniture “just to survive”, that she has been financially assisted by friends in order to buy necessaries such as food, and that they have put their three properties on the market in order “to survive”. That evidence, however, does not, in my opinion, sit well with the fact (as appears from the applicant’s bank overdraft account statement) that, in the period from 1 May 2012 to 22 June 2012, the debit balance of the applicant’s overdraft account increased from $263,073.09 to $296,257.66 and that that increase was largely accounted for by expenditure on purchases from retailers including Woolworths, Coles, Bunnings and other hardware retailers, Dan Murphy’s, Bunbury Farmers Market, and by several substantial cash withdrawals. In this connection, I note the applicant’s evidence in cross-examination that she has continued to draw on that account since her incapacity payments ceased at the end of March 2012 (and, indeed, after lodging with the Tribunal her request for a stay order) in order to pay for ongoing renovations to her residential property. That evidence likewise does not sit well with her earlier evidence-in-chief regarding the necessity to sell furniture and also to receive financial assistance from friends in order “to survive”.
I note, furthermore, the applicant’s evidence that she and her husband have put their three properties on the market in order “to survive”. I have reservations, however, as to whether they are genuinely interested in selling their residential property in Collie and their investment property in Tasmania (which, I note, the applicant described as their “retirement home” in her statement of 4 July 2012 – see paragraph 5 above) at the present time. It is, in my opinion, presently open to the applicant to rent out the investment property in Tasmania. Likewise, I am of the opinion that it is open to the applicant to rent out the investment property in Collie. I note the applicant’s evidence that she and her husband are presently living in the latter property while the residential property – in particular, the bathroom – is being renovated. I am not satisfied, however, that the residential property – more specifically, a house, situated in a country town, whose present value, according to the applicant’s oral evidence, is $720,000 – is uninhabitable at the present time and that it is not presently practicable for the applicant and her husband to move back into that property.
It is axiomatic that the cessation of the applicant’s incapacity payments (which, according to her oral evidence, amounted to about $1,400 per week) on 2 April 2012 has financially disadvantaged the applicant to the extent of the amount of those payments. It does not necessarily follow, however, that the cessation of those payments has placed the applicant in a position of financial hardship. Having regard to the nature and amount of the applicant’s assets and liabilities, as stated in her statement of assets and liabilities (part of exhibit A2, set out in paragraph 6 above) and as referred to in her oral evidence (see paragraphs 8–10 above), and also having regard to the contents of her statement of income and expenditure (part of Exhibit A2) and of the financial documentation (Exhibit A3) referred to in paragraph 7 above, I am not satisfied that the applicant’s present financial position is sufficiently unfavourable that it can reasonably be described as a position of financial hardship. I note, furthermore, that options are presently available to the applicant significantly to improve her financial position such as the renting out, if not the selling, of the investment property in Tasmania and the investment property in Collie. I also note that the applicant, according to her evidence, has made no recent enquiries of Centrelink regarding her eligibility for social security payments.
In my assessment the applicant is not presently suffering financial hardship and she, therefore, cannot rely on that factor in support of her request for the making of a stay order in this case.
Conclusion
Although none of the factors discussed in paragraphs 18–26 weighs against the making of a stay order in this case, I do not consider that any of those factors weighs in favour of the making of such an order. Nor do I consider the making of a stay order appropriate, in the circumstances of this case, for the purpose of securing the effectiveness of the hearing and determination of the [applicant’s] application for review, as required by s 41(2) of the AAT Act. In my opinion the applicant’s submission in relation to this issue (see paragraph 15 above) is both speculative and misplaced. I regard it as speculative because I am not satisfied that the sale of any of the applicant’s properties would be the necessary, or even likely, consequence of a failure to make a stay order in this case. Nor am I satisfied that, if such sale or sales did occur, the applicant would necessarily suffer a financial loss thereby; on the contrary, it may be that such sale or sales would generate a profit to the applicant, rather than a loss. In any event, I regard the abovementioned submission as misplaced because it does not raise issues which, in the circumstances of this case, relate to “the effectiveness of the hearing and determination of the [applicant’s] application for review”, within the meaning of s 41(2) of the AAT Act.
Having considered the interests of the parties in this case, in the light of the abovementioned evidence and submissions presented by the parties, I am not “of the opinion that it is desirable” to make an order “staying or otherwise affecting the operation or implementation” (within the meaning of s 41(2) of the AAT Act) of the decision under review in this proceeding, namely, the reviewable decision dated 3 May 2012.
I conclude, therefore, that such an order should not be made in this case.
Order
For the above reasons, the applicant’s request, lodged with the Tribunal on 9 May 2012, for the making of an order under s 41(2) of the AAT Act is refused.
I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the order herein of Deputy President S D Hotop ...............[sgd D Brodie]..................................
Associate
Dated 2 August 2012
Date of Interlocutory Hearing 17 July 2012 Solicitors for the Applicant Waterside Legal Counsel for the Respondent Mr B Dube Solicitors for the Respondent Sparke Helmore
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